COP28, the 28th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change, has concluded in a final agreement referred to as the ‘UAE Consensus’. The agreement outlines negotiated outcomes and commitments from the 14-day event attended by roughly 84,000 people including 156 Heads of State and Government and 22 leaders of international organisations.
The UAE Consensus acknowledged the significant collective progress made towards the Paris Agreement temperature goal to limit global warming to well below 2°C above pre-industrial levels, and to pursue efforts to limit temperature increase further to 1.5°C. However, it also noted that some of the Paris Agreement commitments had not been met including the requirement for developed countries to reduce emissions by 25-40% below 1990 levels by 2020.
For companies, the commitments made by Australia and other countries may provide further opportunities to engage with and capitalise on investments in the Environment, Social and Governance (ESG) sector. Some of these commitments are summarised below.
Global Renewables and Energy Efficiency
The UAE Consensus called on Parties to contribute to the global reduction in greenhouse gas emissions in line with the 1.5°C goal by ‘transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science.’ There has been some disappointment stemming from the decision to recognise the need to transition away, rather than to phase-out, fossil fuels. The UN Climate Change Executive Secretary noted in his closing speech that “whilst we didn’t turn the page on the fossil fuel era in Dubai, this outcome is the beginning of the end”.
The Global Renewables and Energy Efficiency Pledge was endorsed by 150 countries including Australia. Signatories committed to take comprehensive domestic action to ‘triple the world’s installed renewable energy generation capacity’ and to ‘double the average annual rate of energy efficiency improvements.’ Parties also agreed to ensure energy efficiency is the ‘first fuel’ at the core of policy making, planning and investment decisions. Climate Action Tracker has praised the pledge for its capacity, if implemented, to close roughly a third of the gap between current climate policies and the 1.5°C goal in 2030.
Financing
The Loss and Damage Fund was operationalised at COP28 with 19 countries, including the United Arab Emirates, pledging a total of $US726 million towards the fund. The Loss and Damage Fund will operate to assist particularly vulnerable developing countries to recover from the economic and non-economic losses resulting from climate change.
ALTÉRRA, a $US30 billion climate change fund was also launched by the United Arab Emirates. The fund aims to stimulate innovation by steering capital towards climate investments and providing risk mitigation capital to incentivise investment flows in the Global South, particularly amongst developing countries.
Agriculture, Food & Climate
The UAE Consensus recognised the need to prioritise food security with food production systems being particularly vulnerable to the adverse effects of climate change. 59 countries including Australia signed the COP28 UAE Declaration on Sustainable Agriculture, Resilient Food Systems, And Climate Action declaring their intent to promote food security, reduce the vulnerability of food producers to the impacts of climate change, maximise climate and environmental benefits associated with agriculture and food systems, and support workers in agriculture and food systems to maintain decent and inclusive work.
Gender-Responsive Just Transitions
Australia and 75 other countries have endorsed the COP28 Gender-Responsive Just Transitions and Climate Action Partnership to implement the Paris Agreement and drive gender-responsive just transitions to strengthen participation and leadership by women and girls in the context of climate change, energy, and environmental programs. The Declaration acknowledges that women and girls are disproportionately impacted by the adverse effects of climate change, which can exacerbate existing inequalities.
Key Takeaways
In its National Statement at COP28, Australia indicated its determination to become a ‘global renewable energy superpower’. The government has already implemented measures which are in line with its COP28 statement. In July 2023, the Net Zero Economy Agency was established to promote ‘orderly and positive economic transformation to ensure Australia, its regions and workers realise and share the benefits of the net zero economy’. This was followed by the expansion of the Capacity Investment Scheme in November 2023 to encourage new investments in the renewable energy space.
To meet its COP28 commitments, including to triple the world’s installed renewable energy generation capacity and double the average annual rate of energy efficiency improvements by 2030, the Australian government will be required to substantially increase its investments in renewables and energy efficient goods. This will likely come through the form of new regulations. Our ESG team can assist companies to navigate these changes and any associated risks, and to make the most of the opportunities that result in the ESG space.
